Illustration: Aïda Amer/Axios

The corporate debt market is beginning to follow the public equity market's lead in decoupling from the real economy.

Why it matters: Private equity and its lenders spent 2009 staring into the abyss. In 2020, they're just pretending it doesn't exist.

Driving the news: KKR reportedly is prepping a $2.75 billion dividend recap for Epicor Software, a portfolio company it tried and failed to sell last year. It would be the first such deal since before the pandemic began.

  • The argument for this deal is that KKR has cut Epicor's leverage load since acquiring it from Apax Partners in 2016, and that it has strong recurring revenue and cash flow.
  • The argument against this deal is that Epicor is selling enterprise software in the midst of a severe recession, with a particular focus on retail, manufacturing and distribution. It's one thing to keep the ship steady, it's quite another to encumber it with new debt.

The big picture: Overall credit conditions have steadily improved since March, thanks in large part to Fed backstops.

  • Private equity execs tell me that high equity prices, not debt availability or terms, is their stumbling block for new deals. As one explained: "The banks obviously know there's a pandemic, but you wouldn't know it when you talk to them about financing a new deal."
  • Defaults and bankruptcies have steadily increased since March, but much of that has been siloed in particularly hard-hit industries (retail, hospitality/leisure) or for companies that were already struggling.
  • Overall, the percentage of corporate bonds trading at distressed rates has fallen from more than 30% in March to 12.7% in June.
  • Within the leveraged loan market specifically, the current default rate is at less than one-third of its 2009 financial crisis peak.

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Dan Primack, author of Pro Rata
Oct 20, 2020 - Economy & Business

The SPAC boom is starting to crack

Illustration: Aïda Amer/Axios

The SPAC boom is beginning to show its first cracks, as several private equity-sponsored efforts have needed to downsize.

Driving the news: Cerberus yesterday shrunk the anticipated IPO for its telecom-focused SPAC from $400 million to $300 million.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Politics: Chris Christie: Wear a mask "or you may regret it — as I did" — Senate Democrats block vote on McConnell's targeted relief bill.
  2. Business: New state unemployment filings fall.
  3. Economy: Why the stimulus delay isn't a crisis (yet).
  4. Health: FDA approves Gilead's remdesivir as a coronavirus treatment How the pandemic might endMany U.S. deaths were avoidable.
  5. Education: Boston and Chicago send students back home for online learning.
  6. World: Spain and France exceed 1 million cases.

Early voting eclipses 2016 total with 12 days until election

People stand in line to vote early in Fairfax, Virginia in September. Photo: Tasos Katopodis/Getty Images

Americans have cast more than 47.1 million ballots in the 2020 presidential election, surpassing the total early-vote count for 2016 with 12 days left until Election Day, according to a Washington Post analysis of voting data.

Why it matters: The election is already underway, as many states have expanded early and mail-in voting options because of the coronavirus pandemic.